Interest Rate Manipulation Fails

On February 9th, Business Insider Australia published “CARNAGE IN JAPAN: Nikkei’s largest fall in years, yen spikes, government bond yields below 0%” which said in part:

“On Monday [February 8th], the benchmark Nikkei 225 index lost more than 900 points, closing the session at 16,085.44. The 5.4% one-day decline was the largest since June 13, 2013 . . . . Since January 29th, the day the Bank of Japan adopted a negative-interest-rate policy, the Nikkei index has lost more than 10%.”

Since mid-December, when the U.S. Federal Reserve increased the U.S. interest rate by 0.25%, the U.S. stock market has also suffered a significant decline.

Japan lowered its interest rates to zero—and then to a negative interest rate—their stock markets fell.

The U.S. raised interests from 0.25% to 0.50%, and the US stock markets fell.

The world’s stock market indices are falling. Judging by the US and Japanese recent experiences with raising—and lowering—interest rates, interest rate manipulation is insufficient to overcome whatever forces are causing the market declines.

This implies that neither the Bank of Japan nor the Federal Reserve has any viable tools–including interest rate manipulation–that can reliably stimulate the economy and withstand the forces of economic depression.

QE (Quantitative Easing; the distribution of “free” currency to banks) in both nations has also failed to stimulate their economies.

What tools are left to “simulate” the economy except (allegedly) negative interest rates (NIRP)—and NIRP will almost certainly fail to have any positive effect other than to make people laugh or cuss.

NIRP is a fantasy or a fraud designed to encourage the public to have (false) confidence in the central banks’ ability to control the world’s economies. NIRP is almost certainly a device whose primary purpose is to hide the fact that the central banks have lost their ability to control their economies and are just waiting for, and dreading, the moment when the world recognizes that truth.

“While concerns over the outlook for the global economy contributed to the decline, renewed strength in the Japanese yen . . . was also a major factor behind the Nikkei’s decline.”

“Renewed strength in the Japanese yen” is evidence of deflation.

Deflation is a hallmark of economic depression.

Both the U.S. dollar and the Japanese yen have been growing stronger—which is evidence that the world’s #1 and #3 economies are in deflation and on the brink of, or perhaps already in, an economic depression. And, so far, they’ve shown no tools able to prevent that deflation.

“While continued easing of monetary policy by the Bank of Japan, along with renewed global growth fears, saw yields on benchmark 10-year Japanese government debt fall below 0%, taking them to lows never witnessed before.”

“Lows” in Japanese bonds “never witnessed before” is surely bad news for Japan. But will Japan’s misfortune also afflict the U.S. economy?

Anyone who supports the New World Order and Global Free Trade must also support further integration of the U.S. economy into the economies of other countries. Insofar as the U.S. economy is integrated into Japan’s economy, there will be economic contagion between those two countries. Thus, it appears that Japan’s economic depression can infect the U.S. economy with the same disease.

Insofar as the U.S. economy is integrated into the world’s, the U.S. economy can be damaged by economic contagion spinning off from other countries like Japan, China, and the EU.

Do we really want to be integrated into a world economy where the U.S. economy’s health depends on the health of foreign economies? Isn’t our integration into foreign economies a little like contracting to take blood transfusions from a blood bank located in a gay neighborhood?

It may be that, formerly, the risks created by such contracts were “acceptable” insofar as we believed the central banks had the tools to quickly cure any transmissible diseases. But as it becomes increasingly clear the central bank “doctors” have no cures for what currently ails our economies, do we really want to risk further economic integration? Or should we opt for more independence and even economic isolation?

• In the final analysis, interest rate manipulation is a means of income redistribution. Income redistribution is a form of legalized theft, but it is is theft, nonetheless.

In a free market, interest rates are not controlled or mandated, but are negotiable. In a free market, if you are a creditor with $100,000 to lend, you might want to charge 10% interest on your principal. As a potential borrower, I might want to pay 2% interest to borrow your $100,000. After some negotiation, I might agree to pay 5% and you might agree to accept 5%. Assuming we were both fairly knowledgeable about the economy, that negotiated 5% might be a pretty fair interest rate.

If that 5% interest rate is too high (it should’ve been 3%), the foolish borrower overpays by 2% and the creditor gains 2% (over a “fair” 3% rate). If the 5% interest rate is too low (a “fair” rate was 7%), the borrower pockets an extra 2% and the creditor loses 2%. The object in a free market is to establish an interest rate for a particular time and place that’s fair to both sides.

Ideally, in a free market, both sides win. The borrower wins by borrowing funds at a reasonably low interest rate. The creditor wins by lending funds at a reasonably high interest rate.

However, in a manipulated (un-free) market, interest rates are arbitrarily set by central planners at the Federal Reserve. If the interest rates are set to high, creditors win and borrowers lose. If the interest rates are set too low, creditors lose and borrowers win. When the interest rates are arbitrarily set by central planners, at least one side (creditors or borrowers) is guaranteed to lose.

We’ve had eight years of near-zero interest rates set by the Fed. These near-zero interest rates were justified as a means to entice borrowers to borrow from creditors at unreasonably low interest rates in order to “stimulate” the economy. Thanks to interest rate manipulation, if I want to borrow $100,000 and a a reasonable, free-market interest rate is, say, 5%–but the Federal Reserve has mandated that I only pay 2.5%–I am enticed to borrow the $100,000 because I know I’m getting the money cheap. I also know (but don’t talk about it) that the creditor is being robbed by being forced to accept an interest rate that is so unreasonably low that the creditor is all-but-guaranteed to lose some of his capital.

This robbery of creditors is justified by the need for people to borrow more currency, so they can spend more currency, and thereby “stimulate” the economy. That might be a good rationale, but it can’t justify the theft that results when creditors are forced to accept unreasonably low interest rates and accede to being robbed by borrowers.

Our recent eight years of near-zero interest rate manipulation has not succeeded in stimulating the economy, but it has succeeded in causing the involuntary redistribution of wealth from creditors to borrowers. That involuntary redistribution of wealth is, at bottom, theft. Creditors have been robbed for the past eight years by the central planners’ imposition of near-zero interest rates.

Can America expect to come to a good end by legalizing the immoral and criminal robbery of creditors by borrowers? Can the “end” (economic stimulation) really justify the “means” (theft by interest rate manipulation)? As a people, do Americans gain more by being able to borrow currency at artificially low interest rates than they lose by ultimately realizing that their gains were achieved by government-sanctioned theft?

Can economic stimulation justify a loss of personal dignity and self-esteem?

Yes, you may have received an extraordinarily beneficial mortgage loan when you built your new house. You might be proud to show off your new house to your friends and neighbors. But when you look in a mirror do you realize that you’re “great deal” on the mortgage was achieved by robbing your creditor? Do you understand that, by virtue of the government-sanctioned robbery, you’re a fraud? You didn’t really deserve the new house you built. You got that house, alright. But you only did so by means of robbing your creditor under the guise of near-zero interest rates.

Like a Mafia crook using criminal gains to become a “legitimate businessman,” you know that however much wealth you’ve acquired, it all started with your complicity in the Fed’s criminal acts of interest rate manipulation. Yes, you won the trophy–but you cheated to do so. Some won’t care if they cheated, but some are sufficiently moral to be concerned by their complicity in interest rate manipulation and resulting theft. I wonder if they’ll get over that concern one day, or if it’ll bother them for the rest of their lives.

Are the people of the nation well-served by knowing they’re a bunch of thieves?

If you’re prepared to rob your creditors by paying mandatory, artificially-low interest rates, what is your moral grounds for complaining if somebody else (say, government) robs you? Once we start to accept involuntary-income-redistribution/interest-rate-manipulation, we sacrifice our claim to being moral men and women. Can our economy withstand the knowledge that we have become a bunch of crooks, ruled by a government that’s composed of even more criminal?

• I may have made too much of the immorality, guilt, and loss of self-esteem that flows from manipulated interest rates.

But this much is sure. for the past eight years, near-zero interest rates have been robbing creditors. Creditors are being pushed closer and closer to bankruptcy. If we keep robbing our creditors, soon our creditors will be insolvent and there’ll be virtually no more loans to be found. How can a debt-based monetary system and debt-based economy survive without creditors?

Borrowers may cheer for cheap interest rates that allow them to buy bigger homes for smaller monthly mortgage payments. But, if the interest rate manipulation continues long enough, those same borrowers will bawl when they find out the creditors have been consumed and are gone.

Interest rate manipulation by central planners is theft. Insofar as we tolerate mandatory interest rate manipulation, we tolerate and embrace theft. Should we be surprised if our government turns out to be run by a bunch of laughing, grinning crooks?

Didn’t someone write that people get the government they deserve?

Did we earn a criminal government when we cheered for interest rate manipulation?

ARE YOU KIDDING ME? What absolute B.S.! you must be a damn shill or bankster!!!! you have no clue as to who is who and what is want. the people are the creditors and can only be the creditors you moreoff! Banks are fictions, creations of man and exist only because of man and for the sole purpose of robbing the people of their homes, lives and wealth!! Read some history for crying out loud.!!!
“But when you look in a mirror do you realize that you’re “great deal” on the mortgage was achieved by robbing your creditor? Do you understand that, by virtue of the government-sanctioned robbery, you’re a fraud? You didn’t really deserve the new house you built. You got that house, alright. But you only did so by means of robbing your creditor under the guise of near-zero interest rates.”

THIS IS WITHOUT A DOUBT THE WORST ARTICLE TO EVER BE POSTED.. EVER.!!1 COMPLETE LIES, MISSLEADING AND IS THE VERY REASON FOR THE PROBLEMS AROUND THE WORLD!
WHAT ON EARTH WERE YOU GUYS THINKING WHEN YOU PUBLISHED THIS??
THE BANKS ARE AND ALWAYS HAVE BEEN THE MONEYCHANGERS, EVEN CHRIST GOT MAD ENOUGH AT THEM TO TURN OVER THEIR HEAVY TABLES AND BEAT THEM WITH A WIP!!!
CHARGING INTEREST FOR MONEY IS THE DAMN PROBLEM!! HOW CAN YOU CHARGE MORE FOR SOMETHING THAN EXISTS?? IT IS AN OXY MOREOFF….
You may be able to exchange like for like but not more of something that is limited. Money is limited and when one charges interest it necessitates the need to make more which inherently diminishes the value of what already is and then that requires more value in exchange than it is worth and eventually it is worthless and people will simply stop using it which means it is worth even less so they print more and so forth till it is good for nothing not even burning because of the toxins.
Money is a means of exchange ONLY a piece of paper which is merely an accounting of what is in reality.. real..not fake. Banksters steal the real in exchange for the fake and you have the audacity to say that the people are the thieves? DESPICABLE!!
I busted my ass working around the clock to build my houses and did damn good work that lasts a long time, good on thermal dynamics, ease of use, maximizing space utilization, longevity and at a cost no one can beat and the banksters which “LOANED” NOTHING not even money, stole the properties and the funds and the wealth of the people including me!!
You must be a troll .. question is why on earth this article got published in the first place? This is the party line the banksters rant what they have been getting the courts to believe so the judges will give the third party carpetbaggers a home which they have absolutely no interest or entitlement to.
None of them ever put up even a penny and that is why a business which does noting but accounting can not “account” for any funds derived from them…. Dumb ASSes!!
What a waist.. I wondered about this site before and now I really doubt that it has the best interests of the people in mind … this article starts off good but ends up being pure propaganda… you really should remove it!! it undermines all the hard work we have done of uncovering the greatest criminal enterprise ever perpetrated on the world and we can most certainly look in the mirror and be proud to have done so and are doing something about it still. These criminal need to be put into jail… if the banks were being “robbed” then why are the banksters so rich while the rest of the world is driven into poverty?
Yes the interest manipulation is simply more evidence that our Government is and has actively participated in the demise of the people by giving power to a private criminal enterprise which President Jackson worked so hard to throw off.. and congress never had the power to institute a central banking cartel in the first place.. But as stated before.. it is not about who is in control of the interest rates but the fact that there is any interest on the use of paper which is only an accounting sheet nothing more!!!!! Remember the tally stick and colonial script? They worked fine and in fact when England wanted to deprive the people of the use of it and to control it (because England had been taken over by the Central Bank of England which took the richest nation on earth at the time and within 5 years was bankrupt by the banksters.. hmmm imagine that.. so England wanted to tax the colonies to pay its interest to the Central Banksters… sound familiar? – Result? Revolution!
INTEREST = DEATH Simple as that. BANKS=INTEREST=DEATH simple as that!!!
WE have our government controlled by the banksters only this time we need no “revolution” or revolt and separation from a King but to simply “alter or abolish” those Forms of Government which are not working for us…. most of them. Time for a house cleaning.. senate and congress house cleaning and this time to instituted “new guards for ‘our’ security” (see Declaration of Independence)
Perhaps what makes more sense is to do as our Trust states

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

If you don’t like it you are free to “travel” to another country run by banksters or start your own…
But we the people need to get our shit together and make the changes needed to clean house and restore justice and the American freedoms Now is the time for us not the alleged leaders, but uis the people who are the grantors and creators and were given this earth and all that is within for our benefit and to care for. Can we grow up and realize that Government like Banks invariably become corrupt and cause the demise of the very people that created it to serve and protect? and chose to simply believe in ourselves to “govern” our own activities … which when you look at it truthfully we already do. Ironically the more law enforcement that is created the more criminals emerge.. statistically exponentially just as the less guns in the common man hands the more gun violence there is…. the more laws to manage the more corrupt use of the laws for profit.. etc etc,..
It is the time for the people to be responsible and require others to be responsible. Time to create community again… eliminate that which is on its face destructive .. starting with interest, banksters (everything is going towards crowed funding anyway) and once people realize that we have everything we need already and currency is just an accounting and that the more freedom people have the less they need to horde. There is lots of energy all around us we only need to tap into it. It was Tesla that wanted to make electricity virtually free but JP Morgan put a stop to it because of “PROFIT” or “Theft” of what is rightfully the peoples … get rid of interest, and most importantly “PROFIT” … and the whole damn concept of PROFIT” because it is by its nature “excess” or “income” which is unlawful and which is why the corrupt Gov. taxes it…. now the Gov unlawfully taxes everything. “Wages” is not “income” and taxes breaches our right and power to contract a violation among other things of Art I section 10 …
Enough said?? If you don’t get it by now then you need to put your head in the toilet and flush it over and over again until you get it. (by keeping your head in the toilet and continuously flushing it to breath is the problem) get your head out of the toilet, stand up be a man (non gender) and act like one.

The first point to the article is simple. If you borrow currency in a free market, you can reach an agreement with your creditor that is theoretically “fair” to both sides as to what level of interest you pay. Yes, your creditor (banker) may be a crook, but you are free to borrow from him or not. You are free to choose to do business with crooks/bankers or try to borrow the currency from your uncle Bob.

If you borrow currency in a manipulated market run by central controllers where the interest rate is mandated by government to be at irrationally low levels, your interest rate payments are are kept low at the expense of your creditors. Even though the artificially-low interest rates are “legal,” borrowers enjoy and unearned “subsidy” that’s paid for by your creditors. Insofar as that unearned subsidy is mandatory, by borrowing currency at artificially low rates you are an accomplice to theft of wealth from the creditors–usually, the banks.

If you want to be an accomplice to one theft that enriches you (as a borrower at near-zero interest rates), where is your moral standing to complain about being robbed in another theft the impoverishes you? More, if you’re happy to be subject to a government that robs others on your behalf, you can’t complain about a government run by crooks. By taking advantage of the “opportunities” provided by government to acquire wealth you haven’t personally earned, you’ve joined the “gang” and become a thief, yourself.

The fact that the banking industry may be populated by crooks does not change the fact that they are being robbed by artificially-low interest rates. Al Capone may have been a crook, but it was still against the law to rob him. The bankers may be crooks, but it’s still against moral law to rob them.

My comments are not about the moral nature of the bankers but about the moral nature of the borrowers. If you want to participate in theft against anyone–even bankers who are themselves thieves–you are immoral and a thief. You may only be a “little” thief, but you’re still a thief.

I speculate that a nation that’s encouraged by law to rob each other will become an immoral nation. I speculate that that the damage to a nation caused by systemic immorality (where everyone is allowed or encouraged to act as thieves) will be far greater than the benefit of any “economic stimulation” that might result from the “theft” inherent in near-zero interest rates. I speculate that if the institutionalized theft found in near-zero interest rates is allowed to persist long enough, the resultant national embrace of immorality will, all by itself, ultimately collapse the economy and perhaps destroy the nation.

I used the example of mortgages to try to illustrate my point. I did not argue that mortgages are the only evidence of institutionalized theft seen in artificial, mandatory, and irrationally low interest rates. That is, I did not argue that local bankers were the only victims of this theft.

I am well aware that other ordinary people are also robbed by the Fed operating under the same principles.

I am arguing that the fact that any of us have been robbed does not entitle us to rob others.

Some people, who object vociferously to having been robbed, insist on their resulting right to not only rob others but to do so as an act of justice.

I’m arguing that the central-control system is inherently immoral and should therefore be destroyed. I’m arguing that every one of us needs to take a look at however much theft we personally benefit from, call a spade a spade and a thief a thief even if we are the spades/thieves, and 1) stop being thieves; 2) destroy the economic institutions that encourage us to become thieves; and 3) stop parading around like honest men and women while we are the knowing beneficiaries of organized crime (centrally-planned and manipulated economics).

Again, we get the government we deserve. If we allow ourselves to rob others and work to justify that theft as “entitlements,” welfare, subsidies and “just workin’ the system,” we have no ground to complain when we, ourselves, are robbed. Those who merrily rob others but scream when they, themselves, are robbed are hypocrites.

If it’s true that we get the government we deserve, the remedy for a corrupt government is to become a moral individual and a moral people.

You complained that I don’t recognize that the American people are being robbed by the bankers. You’re wrong. I’m well aware. I’m even aware that foreign nations have been robbed and plundered by US banks and the US government. I’m aware that the result of that plundering has, to some degree, enriched virtually all Americans.

I’m also aware that those of us who recognize the international thefts being perpetrated by our government against foreign countries secretly laugh with glee at the benefits we’ve received from those international thefts. Insofar as we cheer when our government robs Iraq, Syria, Libya or any other nation with fiat/petro-dollars, we have no right to scream when our government also robs us.

My argument is that the centrally-planned “economic system” we accept is inherently corrupt and should be abandoned and replaced by a system that’s inherently moral (or at least much less corrupt). I’m not screaming that no one should be allowed to rob me. I’m arguing that no one (including me and you) should be allowed to rob anyone . I’m arguing that no moral man or woman can rationally support any centrally-controlled economy because the central-controllers are always thieves.

As for interest, the Bible warns that it’s a problem but it’s been with us for millenia. It won’t disappear anytime soon. Even the Bible allows interest to be charged to foreigners. For those who object to paying interest, the solution is simple: don’t borrow. Instead, work hard, earn and save your own wealth until you have enough to buy or build whatever it is that you want.

As for “profit,” when the Bible says, “What profiteth a man to gain the world but lose his soul?,” the Bible implicitly admits that profit exists and is not inherently bad.

As for free energy, I regard the concept as something like unicorns and honest politicians. I look forward to seeing such entities and will cheer when I do. In the meantime, I suggest that we work to diminish our own predispositions to not only scream when we are robbed but also to stop grinning when we are the robbers.

You might want to dip your own head in the toilet and flush repeatedly while you consider whether your “righteous rage” is really “righteous”.

I try to minimize the use of profanity on this blog. Therefore, I erased some of your profanity from your comment. Next time I see you using so much profanity I’ll send your comment to the trash rather than read it.

Nice reply, and I get all that you have said and even get your intent though I think it is missfounded in one way I also agree that the banksters got around no interest by simply offering people interest and they lined up to get it so that they would/could not point the finger at the banksters when they charged interest. I also agree though the point sounded more of the people being thieves than that we needed to get rid of the whole central banking system. what it seems you missed was that interest of any kind negotiated or not is wrong so how can one “steal” that which is unlawful. 2nd what you also fail to address is the fact that one can not steal that which is already theirs!! Everything was made for us and given to us. The fiat money system runs on the credit of the people so how can any one “borrow” that which is already theirs and then pay interest on what is already theirs ??
Further the banks never “loan” anything!!! that is just a fact so to say that one is stealing from the banksters is in and of itself a hoot because the banks are not allowed to loan credit nor are they allowed to loan depositors money nor their own so the fact is that they do not loan anything and yes I can prove that in several ways, which is one reason that when you challenge a debt properly you will win because they can not show any record of them loaning anything in the first place so the interest issue is moot at best and a false accusation at worst.
Not that people seem to be just as corrupt as banksters when given a chance but that is another story all together. There are a lot of innocent and good hard working people who do not deserve to be robbed of their homes their wealth their hard earned currency or anything for that matter.
Your points might be valid if it were not a fact that the people are the only true creditors and interest is a crime in any way. and that the banks never loan anything.. thus my indignation is valid… sorry for any cuswords, thought we were grown ups here, after all calling someone a thief is far worse than a little other four letter word. but I will respect your wish.
I hope you really get this because pretending or believing otherwise is what keeps and will continue to keep people enslaved.. all the best.

peg-powers

February 20, 2016 at 2:18 PM

Thank you, Alfred. Let’s continue on the right track—-and not jump the straight and narrow rails.

You imply that interest is “wrong” in all cases. Yes, as I recall, the Old Testament says or implies that interest is prohibited for members of the Hebrew tribes–but it’s OK if charged against non-Hebrews.

That means that, contrary to your assertion, interest is not Biblically “wrong” in all cases.

Right or wrong, you are missing a fundamental point: interest is here, it’s been here for centuries, and it’s not going away anytime soon.

Nothing sure but death, taxes–and interest, hmm?

In any case, whatever scams, frauds and sins the bankers may have perpetrated, those crimes do not justify us in committing more crimes against the bankers. The bankers can be charged with their crimes and made to pay fines and penalties, etc., but that does not entitle you or me to rob the bankers.

In the end, you and I have no more right to rob Al Capone than we do to rob the Pope.

How ’bout, you and I have no more right to rob Al Capone than we do to rob Barack Obama . . . ?

Nope–another bad example. Compared to Obama, Capone might be the good guy.

OK–how ’bout this one? “You and I have no more right to rob Al Capone than we do to rob your children.” Your kids are innocent. The can be no justification for robbing them.

In the end the issue is not about WHO is robbed, but rather about WHO is committing the robbery.

As I recall, the Ten Commandments say something about “THOU shalt not steal.” I could be wrong, but the Ten C’s did not say, “Thou shall not steal (from anyone other than bankers)”. I assume that means that you and I are not entitled to personally rob others–not even criminals or bankers.

I’m not defending the bankers. I’m saying to helk with them. I’m saying that just because the bankers may be crooks doesn’t justify you and me becoming crooks. If you believe in the God of the Bible, there’s more at stake here than money; more at stake than interest. Maybe we’re talking about your and my souls.